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TMI Blog1997 (9) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... s year for assessment year 1988-89 and this situation would be incongruous with the provisions of section 3 of the Income-tax Act, 1961, as amended by the Taxation Law (Amendment) Act, 1987." 3. The facts relating to the aforesaid matter are briefly as under. The appellant-company was following its previous year ending on 31st day of December, 1987. An application dated12-11-1987was filed before the Assessing Officer on12-11-1987seeking change of the previous year from31st December, 1987to30th June, 1988. the permission was sought for changing the accounting period from '1-1-1987 to31-12-1987' to '1-1-1987to30-6-1988' under section 3(4) of Income-tax Act, 1961. 3.1 The Assessing Officer thereafter issued a noticed dated25-11-1987asking the assessee to explain the reasons for seeking the change in the accounting year as well as its impact on the revenue. The hearing for this purpose was fixed for3rd December, 1987. 3.2 The assessee submitted a reply dated27th November, 1987in which he explained the reasons for seeking the change in the accounting year and also explained the impact on the revenue. In para 3 of the said reply, the assessee gave various details to show that reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted10-5-1990before the CIT(A). 3.7 The CIT(A) vide his order dated12-12-1991, cancelled the order under section 154/3(4) passed by the Assessing Officer. The present appeal by the revenue is directed against the said order of the CIT(A). 4. The ld. D.R. contended that the order under section 3(4) passed by the Assessing Officer on 7-12-1987 is patently invalid in view of the amended provisions of section 3 which was introduced by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1-4-1989. The new provisions relating to uniform accounting year have been introduced w.e.f. assessment year 1989-90. In case the assessee's contention is accepted, the previous year relating to assessment year 1989-90 will cover a period of 27 months from1-1-1987to31-3-1989, which is not permissible under the provisions of section 3 of the Act. It, therefore, necessarily leads to the conclusion that the order passed by the Assessing Officer on 7-12-1987 is apparently illegal as there will be no assessment for assessment year 1988-89 and the assessment for assessment year 1989-90 will cover a period of 27 months which is not legally permissible. This was an apparent mistake of law. Hence, the successor A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 3(4) by a successor ITO. He, thus, strongly supported the order of the CIT(A). 6. We have carefully considered the rival submissions made by the Ld. representatives of the parties and have perused the orders of the Ld. Departmental Authorities. 6.1 The provision of section 3(4) as it existed at the relevant time clearly empowers the Assessing Officer to grant permission for the change of accounting year upon such conditions as the Assessing Officer may think fit to impose. In the present case, the board of directors of the appellant company passed a Resolution on3-11-1987for change of the accounting year to cover the period from1-1-1987to30-6-1988. An application was submitted on12-11-1987to the Assessing Officer for granting permission for the said change. The Assessing Officer after making necessary enquiries granted such permission vide order dated7-12-1987. The order so passed by the Assessing Officer granting permission for change of accounting year was perfectly a valid order in accordance with section 3(4). The observations made by the successor Assessing Officer in the order under section 154 that his predecessor had lost sight of the amended provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961. Such a view is clearly fortified by the judgment of the Hon'ble Supreme Court in the case of T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50. The impugned order passed by the Assessing Officer under section 154 is liable to be quashed on this ground also. 7. In view of the aforesaid facts and discussions and in view of the elaborate reasons given by the CIT(A) in the order passed by him, we do not find any justification in interfering with the view taken by the CIT(A). In our view, the revenue's appeal has no merit. Assessment year 1989-90 : 8. We will now deal with the revenue's appeal for assessment year 1989-90. 9. The assessee-company filed a return on29-12-1989declaring a loss of Rs. 7,87,68,821. The Assessing Officer processed the said return under section 143(1)(a) and made various adjustments by way of additions and disallowances aggregating to Rs. 86,69,364 and thereby determined the assessee's total loss at Rs. 7,00,99,457 vide intimation dated 11-5-1990. The assessee filed an application under section 154 on 8-10-1990 in which the various disallowances and additions made by way of prima facie adjustments under section 143(1)(a) were disputed. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the CIT(A) and invite our attention towards the detailed written submissions submitted before DC (Asstt.) in which submissions were made with regard to each item of disallowances and additions made by the Assessing Officer with a view to prove that such additions and disallowances were of a debatable nature. He further invited our attention towards the instructions issued by the CBDT No. 1814 dated 4-4-1989 in which it was clarified that items of debatable nature will fall outside the scope of adjustments under section 143(1)(a). He, thus, strongly supported the orders of CIT(A). 13. We have carefully, considered the submissions made by the ld. representatives of the patties and have perused the orders of the ld. departmental authorities. 13.1 The proviso to section 143(1)(a) empowers the Assessing Officer to make adjustments while processing the return under section 143(1)(a) in respect of apparent mistake specified in the said Proviso. It permits adjustments in respect of any arithmetical errors in the return, accounts or documents accompanying the return. Any deduction, allowance or relief or any carry forward of loss which is prima facie admissible but which has not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b. Lions Club and other associations. Rs. 1,200 was paid towards Diners Club. The liability of such expenses claimed in the return is also debatable and cannot be disallowed by way of prima facie under section 143(1)(a). (3) Disallowance of Rs. 47,50,079 under section 43B of Income-tax Act, 1961 : The Assessing Officer has observed that the assessee did not furnish the evidence regarding payment of tax, duty and other items covered by section 43B along with return of income. He has, however, observed that the Tax Auditors in their report have mentioned the dates of payment of tax and duty, etc. The ld. counsel for the assessee invited our attention towards circular No. 601 dated4-6-1991. It has been clarified in the said circular that if the return of income is accompanied by a certificate from the Chartered Accountant giving details of payment of tax, etc., made within the time prescribed under section 139(1), it should be treated as a sufficient compliance of the proviso to section 43B. The ld. D.R. did not dispute the correctness of assessee's submissions that all such outstanding amount, sales tax, Central Sales Tax, P.F., PPF, ESI and Bonus were paid the time prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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